Correlation Between Focus Graphite and Kavango Resources
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Kavango Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Focus Graphite and Kavango Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Kavango Resources Plc, you can compare the effects of market volatilities on Focus Graphite and Kavango Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Focus Graphite with a short position of Kavango Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Kavango Resources.
Diversification Opportunities for Focus Graphite and Kavango Resources
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Focus and Kavango is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Kavango Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kavango Resources Plc and Focus Graphite is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Focus Graphite are associated (or correlated) with Kavango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kavango Resources Plc has no effect on the direction of Focus Graphite i.e., Focus Graphite and Kavango Resources go up and down completely randomly.
Pair Corralation between Focus Graphite and Kavango Resources
Assuming the 90 days horizon Focus Graphite is expected to under-perform the Kavango Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 1.2 times less risky than Kavango Resources. The otc stock trades about -0.01 of its potential returns per unit of risk. The Kavango Resources Plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.60 in Kavango Resources Plc on September 12, 2024 and sell it today you would earn a total of 0.40 from holding Kavango Resources Plc or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Graphite vs. Kavango Resources Plc
Performance |
| Timeline |
| Focus Graphite |
| Kavango Resources Plc |
Focus Graphite and Kavango Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Kavango Resources
The main advantage of trading using opposite Focus Graphite and Kavango Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Kavango Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kavango Resources will offset losses from the drop in Kavango Resources' long position.| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
| Kavango Resources vs. Qubec Nickel Corp | Kavango Resources vs. IGO Limited | Kavango Resources vs. Focus Graphite | Kavango Resources vs. Mineral Res |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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